Sensex down 84 points, Nifty ends in red; IT gains, GAIL falls

26 June 2015

3:30 pm Market closing: The Sensex ended down 84.13 points at 27811.84, and the Nifty slipped down 16.90 points at 8381.10. It is not a great start of the July series. About 1180 shares advanced, 1496 shares declined, and 160 shares were unchanged.

TCS, Bajaj Auto, NTPC, Infosys and Cipla were top gainers while GAIL, Vedanta, Bharti, BHEL and Tata Steel were major laggards.

Speaking to CNBC-TV18, S K Sangar, Managing Director, TFCI says the company expects proposals worth Rs 125 crore to be sanctioned in the first quarter. He also believes disbursements worth over Rs 70 crore will take place during the same period.

Talking about the growth of industry he says efforts taken by tourism ministry has pulled up demand for resorts and hotels. This has improved occupancy both by foreign and middle class travelers, Sangar said.

02:55 pm Market Update: The market failed to hold the recovery. The Sensex slipped 105.72 points to 27790.25 and the Nifty declined 21.55 points to 8376.45. About 1122 shares have advanced, 1481 shares declined, and 151 shares are unchanged on the BSE.

02:40 pm World stocks fall: Global stocks fell as equity investors sought to cut exposure to risk after Greece and its creditors again failed to resolve their differences, paving the way for a last-ditch effort on Saturday to avert a default.

Currency and bond markets took a more cautious stance, driven by expectations that negotiators could still "pull a rabbit out of the hat" - as one strategist put it - before a Tuesday deadline when Athens has to repay 1.6 billion euros (USD 1.8 billion) to the International Monetary Fund.

If default cannot be averted, participants at Saturday's meeting are expected to start preparing a "Plan B" to protect the euro zone from financial market turmoil.

The pan-European FTSEurofirst 300 index was down 0.7 percent at 1,563.62 points by 0803 GMT. The MSCI index of world shares fell for a third day, down a quarter of a percent at 433.19 points.

The one stock market appearing driven by factors other than Greece was China's, which posted some of its worst losses in years as investors worried that the economy is flagging.

02:20 pm Import duty on steel: JSW Steel, India's third-largest steel producer, does not see further increase in steel import duty, billionaire Chairman Sajjan Jindal said today, after a federal minister said a decision on a hike was expected within a week.

Many steel companies, such as JSW Steel, Tata Steel and Kalyani Steels, have seen profits come under pressure in recent quarters due to surging imports of steel from countries such as China and Russia.

Last week, India hiked import duty on certain steel products by up to 2.5 percentage points.

Minister of Heavy Industries and Public Enterprises Anant Geete said today the government would consider further increase within a week.

Jindal said the surging steel imports into India would not reduce unless the government takes more measures.

02:00 pm Market CheckThe market recovered from its day's low, supported by technology, auto, pharma and select banks stocks. The Sensex fell 31.14 points to 27864.83 and the Nifty declined 2.90 points to 8395.10. About 1145 shares have advanced, 1401 shares declined, and 157 shares are unchanged on the BSE.

Ashok Wadhwa, Group CEO, Ambit Holdings, expects corporate earnings growth to be muted for some time, and sees a 6-7 percent downside in equity benchmarks from current levels. He expects aggregate earnings growth of Sensex companies to be 9-10 percent this year.

CNX IT Index climbed more than 1 percent as Accenture's Q3FY15 results beat forecasts. Its revenue growth was up 10 percent in constant currency and it also raised FY15 guidance to 9-10 percent from 8-10 percent. Infosys, TCS, Wipro and HCL Technologies gained 1-3 percent.

"The revised rate, effective on June 16, will be 9.70 percent per annum as against 9.75 percent at present with effect," the bank said in an exchange filing. This is the second base rate reduction by the bank since April this year.

In April, it had slashed base rate by 0.25 percent to 9.75 percent. SBI was the first of the block to reduce its base rate earlier this month after RBI Governor Raghuram Rajan in the June 2 monetary policy statement urged banks to pass through the sequence of rate cuts into lending rates.

The market is sliding on weak Asian cues. The Sensex is down 135.91 points or 0.5 perecent at 27760.06, and the Nifty down 32.70 points or 0.4 percent at 8365.30. About 958 shares have advanced, 1463 shares declined, and 145 shares are unchanged.

Infosys, Dr Reddy's Labs, Cipla, TCS and Wipro are top gainers in the Sensex. Among the losers are GAIL, BHEL, Vedanta, HDFC and Bharti Airtel.

Asian stocks fell as Greece failed again to reach an agreement with its creditors and stumbled towards a default, while major currencies like the euro and dollar drifted in narrow ranges as the debt saga sidelined investors.

China, at present, has all the classic signs of a bubble bursting, believes Michael Every, Rabobank. According to him fear of tighter rules on margin loans is the reason for sell off in Chinese equity market. However, it is entirely possible that the government will step in or reverse the course and try to increase positive sentiment, he says in an interview to CNBC-TV18.

12:50 pm China bubble may burst?: China at present has all the classic signs of a bubble bursting, believes Michael Every, Rabobank.

According to him, the fear of tighter rules on margin loans is the reason for sell off in Chinese equity market. However, it is entirely possible that the government will step in or reverse the course and try to increase positive sentiment, he says in an interview to CNBC-TV18.

Greece situation, too, is weighing on global sentiment as all hopes are now trained on the weekend meeting between euro zone finance ministers

Meanwhile, the Sensex lost 186 points to 27709 and the Nifty declined 48 points to 8350.

12:20 pm Market Expert: The steps taken by the government will revive the economy in the longer term, and high quality investors are convinced about the India story, Ashok Wadhwa, Group CEO, Ambit Group, told CNBC-TV18.

Wadhwa expects corporate earnings growth to be muted for some time, and sees a 6-7 percent downside in equity benchmarks from current levels.

He expects aggregate earnings growth of Sensex companies to be 9-10 percent this year.

He says demand for two-wheelers is muted and likes TVS Motor in that space.

He is bullish on PI Industries and expects earnings to grow 30 percent over the next couple of years

The Sensex fell 137.70 points to 27758.27 and the Nifty slipped 34.10 points to 8363.90. About 1035 shares have advanced, 1237 shares declined, and 142 shares are unchanged on the BSE.

Bank Nifty stuttered in trade, down 1 percent as RBI warned that PSU banks' bad loans may rise. According to the central bank, Rs 53,000 crore of loans to power distribution companies are in danger of slipping into non-performing loans. It added that loans to steel companies also remained spot of worry.

IT stocks got a leg up as Accenture's Q3FY15 results beat not just analyst expectations but also the company's own guidance. Constant currency revenue growth for the quarter was up 10 percent sequentially and the company raised it's FY15 guidance to 9-10 percent from 8-9 percent earlier. CNX IT gained 1 percent.

In the broader space, GVK Power rallied 6 percent after CNBC-TV18 reported quoting sources that the infra major is looking at filing a DRHP for it's airport business this year. India Cements gained 5 percent following a large trade after influential investor RK Damani's investment firm bought nearly 21 lkah shares in the company.

On the global front, China's Shanghai Composite index crashed to its lowest level since May 11, down more than 7 percent, extending Thursday's violent sell-off precipitated by increasing signs of deleveraging and persisting concerns over a flood of new-share listings. The benchmark index closed down 3.4 percent in the previous session.

Dwindling hopes of a Greek deal weighed on sentiment, as the Eurogroup meeting of finance ministers quickly ended without any signs of an agreement on Thursday. German chancellor Angela Merkel said a euro zone finance ministers' meeting over the weekend would be decisive for finding a solution to Greece's debt crisis.

The company is planning to raise Rs 3,500 crore by listing its airport arm, GVK Airport Developers, that operates in Mumbai & Bangalore airports. The IPO proceeds will be used to de-leverage GVK's balance sheet.

GVK Power and Infrastructure has debt of Rs 3,500 crore at holding company.

It is learnt that GVK has undertaken structuring of the company to meet SEBI listing norms. GVK Airport will file draft red herring prospectus (DRHP) by July-end and launch IPO by December-end.

11:30 am Market outlook: Earnings growth for the Sensex is likely to be in 9-10 range in FY16 over FY15 and not 17-18 percent range as per consensus, says Gaurav Mehta, VP-Institutional Equities, Ambit Capital in an interview to CNBC-TV18 According to him although the government has taken steps for economic recovery, it will help the economy only in the longer term and in the short-term it would be unrealistic to expect a high GDP and earnings growth. The recalibration may take some time and may cause disruptions in the neat-term. Recalibration could happen between the current earnings and the next and in the process market could go down 6-7 percent from current levels. He also does not expect any material uptick in earnings for Q1 and Q2.

The market continues to sulk in the beginning of July series. The Sensex is down 88.68 points at 27807.29 and the Nifty is down 21.10 points at 8376.90. About 1040 shares have advanced, 1018 shares declined, and 132 shares are unchanged.

Infosys, Cipla, M&M, Dr Reddy's Labs and TCS are top gainers in the Sensex. Among the losers are GAIL, HDFC, Vedanta, BHEL and Hindalco.

Oil prices were mixed in Asia as dealers eyed the deadlocked Greek debt talks expected to come to a head over the weekend, analysts said. Crude investors were weighing the "potential negative impact from Greece's debt crisis on European energy demand", the lender said in a market commentary.

Greece's emergency negotiations with its creditors - the European Union and the International Monetary Fund - ended abruptly yesterday, pushing the crisis toward a critical weekend meeting in a bid to avoid a default by Athens and its potential exit from the eurozone.

10:58 am Market update: The Sensex declined 50.09 points to 27845.88 and the Nifty fell 12.85 points to 8385.15. About 1041 shares have advanced, 974 shares declined, and 134 shares are unchanged on the BSE.

10:40 am RBI Governor says: RBI Governor Raghuram Rajan has asked central banks from across the world to define "new rules of the game" as he warned that the global economy may be slipping into problems similar to the Great Depression of the 1930s.

Rajan, who has been warning against competitive monetary policy easing by central banks, however, said the situation is different in India where RBI still needs to bring down lending rates to spur investments.

He expressed concern that the world may be slipping into the kind of problems of the depression of the 1930s and an international consensus was needed to be built over time.

"We need rules of the game in order to effect a better solution. I think it is time to start debating what should the global rules of the game be on what is allowed in terms of central bank action," he said at a London Business School (LBS) conference here last evening. "I am not going to venture a guess as to how we establish new rules of the game.

10:20 am Market Expert: Nifty currently is in a crucial range of 8000-8400 but in case there is good news from Greece on Tuesday then Nifty could rise to 8600-8650 is the word coming in from Deven Choksey of KR Choksey Shares but failing that it would go back to 8000.

Greece and Indian politicians seem to be playing spoilsport for the Indian equity market, says Choksey in an interview to CNBC-TV18. Once both these situations are out of the way, market will gain confidence to go up.

Going forward, since we would be entering into the earnings season, market may get further cues from corporates but till them market seems to be consolidating in a tight range, he adds.

10:00 am Market CheckThe market fell half a percent on first day of July series, dragged by banking & financials, capital goods, auto and FMCG stocks. The Sensex fell 130.92 points to 27765.05 and the Nifty declined 30.25 points to 8367.75. The market breadth is weak as about 759 shares have advanced against 974 shares declined on the Bombay Stock Exchange.

GAIL lost 2 percent as Credit Suisse has maintained its underperform rating on the stock with no change in target price. The brokerage feels that large supply starting end-2015 will pressure on spot LNG pricing and a negative for GAIL earnings per share (EPS). It sees addition of 40 percent to LNG supply from Australia, the US by 2020.

However, technology stocks gained after Accenture raised its full-year revenue forecast for third time. It sees Q4 revenue in the range of USD 7.45-USD 7.7 billion and expects full-year revenue growth of 9-10 percent in local currency. Revenue in Q3 stood at USD 7.8 billion. Infosys, TCS and Wipro gained 0.6-1.6 percent.

9:50 am Market check: The market is slipping away as the Sensex is down 153.77 points or 0.6 percent at 27742.20. The Nifty is down 38.95 points or 0.5 percent at 8359.05. About 723 shares have advanced, 930 shares declined, and 124 shares are unchanged.

GAIL, Vedanta, ICICI Bank, L&T and BHEL are major losers in the Sensex.

9:45 am Strong guidance for IT: Accenture raised its full-year revenue forecast for the third time, reflecting continued strong demand for the company's consulting and outsourcing services. The company also reported third-quarter profit and revenue above analysts' estimates, helped by growth in its North America business, sending its shares 2.3 percent higher to USD 99.99 in premarket trading.

Accenture raised its full-year revenue growth forecast to 9-10 percent on a local currency basis. In March, the company said it had expected revenue to grow 8-10 percent in the year ending August. Accenture raised its revenue growth forecast to 5-8 percent in December from 4-7 percent.

9:30 am FII view: In the backdrop of the correction and underperformance of Indian equities over the last quarter, Bharat Iyer of JPMorgan said he re-visited market valuations based on a range of parameters.

''Our key findings are that valuation models based on assets or long-term cash flows suggest a potential upside of 10-13 percent through to the end of the fiscal year.

The market has opened flat on a fresh start of July F&O series today. The Sensex is up 0.03 points at 27896.00, and the Nifty is down 4.05 points at 8393.95. About 245 shares have advanced, 188 shares declined, and 65 shares are unchanged.

Nifty's recent move is exuding a lot of optimism. Resistance for the 50-share index is seen at 8500. In the June series, foreign institutional investors (FIIs) bought Rs 280 crore while domestic investors sold Rs 8.5 crore in cash market.

Infosys, NTPC, Tata Motors, Sun Pharma and Wipro are top gainers in the Sensex. Among the losers are GAIL, Vedanta, BHEL, Lupin and Axis Bank.

The Indian rupee has opened marginally lower at 63.64 per dollar compared to 63.62 a dollar in previous session. Pramit Brahmbhatt, Veracity expects rupee to depreciate today as weakness in Asian markets will force local equities to trade low. Also the strength in USD and month-end USD demand from oil importers may keep rupee under pressure, he believes.

According to him, the rupee may move in a range of Rs 63.30-64/USD.

Meanwhile, the euro slipped against the dollar as Greece talks drag on with no resolution in sight.

Asian markets are mixed on dwindling hopes of Greek deal. Japan released a raft of economic data. Japan's core consumer price index ticked up 0.1 percent from a year earlier in may, a tad above expectations.